Comstock Resources, KKR Pen Eagle Ford Agreement
Comstock Resources, Inc. and Kohlberg Kravis Roberts & Co L.P. (together with its affiliates, "KKR") Monday announced the signing of a definitive participation agreement providing for the participation of KKR in Comstock's future development of its Eagle Ford shale acreage in Atascosa, Frio, Karnes, LaSalle, McMullen and Wilson Counties in South Texas. Under the terms of the participation agreement, KKR will have the right to participate for one-third of Comstock's working interest in wells drilled on Comstock's 28,000 net acres in exchange for paying $25,000 per acre through a drilling carry for the net acreage being acquired by KKR. Comstock expects to ultimately develop most of its acreage based on spacing units of approximately 80 acres. The agreement will apply to wells spud by Comstock on or subsequent to March 31, 2012. Comstock will retain all of its interest in wells spud prior to March 31, 2012. Subject to certain conditions, KKR has committed to providing drilling carry equivalent to $25,000 per acre for the next 100 wells drilled on Comstock's Eagle Ford shale acreage and can continue to participate in additional wells drilled on the acreage for the same drilling carry.
M. Jay Allison, Comstock's Chairman, President and Chief Executive Officer, commented, "We are excited to partner with KKR, one of the premier energy investment firms, in developing our leasehold in the Eagle Ford shale. This transaction will provide the capital necessary to accelerate drilling of this exciting oil play, while still allowing us to have the capital to develop our Wolfbone properties in West Texas."
David Rockecharlie, Managing Director at KKR, said, "As an experienced participant in the early development of the Eagle Ford shale, we are excited to continue in the play's evolution by providing drilling capital for Comstock's Eagle Ford position. We believe Comstock has developed an attractive inventory of drilling locations, and we look forward to participating as a non-operating working interest partner."
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